The two companies spoke on Monday to discuss the issue, with Yahoo contending that Facebook is infringing on 10 to 20 patents, according to these people, who were not authorized to discuss the issue publicly. Yahoo is asking Facebook to pay licensing fees or risk facing a lawsuit.

How much do Facebook and its backers want to go public for a $100 billion valuation?

If Nortel's patent stash is worth $4.5 billion to own and Motorola's is worth $12.5 billion, then I would argue that Facebook should pay at least a 3% tax now to Yahoo! shareholders in order to successfully get liquid now.

Yahoo!'s Scott Thompson, Tim Morse, and its General Counsel Mike Callahan are absolutely right to go after Facebook now before it IPOs. Yahoo! botched the mother-of-all patent infringements when they gave Google (GOOG) a perpetual license to the GoTo.com patent in 2004 10 days before Google's IPO. Yahoo! got less than it should have, given that the patent underlies the AdWords model which accounts for 96% of their $38 billion a year business.

Yahoo! sold some of its 2.7 million Google shares it received in the settlement beginning in August 2004 below $100/share and continued selling through the second quarter of 2005. Yahoo! did sell some stock in late 2004 for more than $180/share and in early 2005 for over $200/share. All told, Yahoo! generated nearly $1.5 billion from its sales of Google stock. That was a high price at the time to realize for patents.

But consider this. At the time in August 2004, when Yahoo! struck the deal, $1.5 billion might have seemed good considering Google had $2 billion in revenue for 2002 and 2003. Yet, Google's revenue from 2002 - 2011 cumulatively is $152 billion. When you consider Google stole a patented business model for AdWords from Yahoo!, paying Yahoo! off a measly 1% for this last ten year's of revenues seems like the bargain of the last 1000 years of business.

It's not often in life you get second chances, but Facebook has given Yahoo! a chance to do it right. Yahoo! needs to insist on a settlement that takes into account Facebook's next 10 years of revenue.

Who knew Thompson would make us miss Jerry Yang. For all his faults, he'd never do something like this.

As Nic's boss, Henry Blodget, would say: "Oh please." This is exactly the point, Jerry probably wouldn't have done this. And find me one Yahoo! shareholder today who is upset about this action.

Silicon Valley has had a very clubby and liberal attitude towards patents. Make love, not war. Grow the pie. Innovate. Don't litigate. Don't be a patent troll. Lawyers are evil. Anyone who sue for patent infringement must be from the east coast or Wall Street. Well, that's just not the world we live in anymore. So, you can deal with it or not.